A Century of Political Turmoil: Here’s What Argentina Taught Me About Sustainable Finance


By Joanna Herrmann, MBA/MS ’16

In 1913, Argentina was the seventh largest economy in the world, comprised 50 percent of South American GDP, and was poised to be a global superpower.

But a century of political turmoil, corruption, and fluctuating monetary policy has resulted in today’s Argentina, where I recently spent seven weeks on a student exchange.

Today’s Argentina accounts for less than 10 percent of South American GDP, and the country has fallen to 50th globally in terms of GDP per capita.

This fact was repeated quite often during my exchange program in Buenos Aires, as the professors sought to have us understand how the past century has impacted Argentina’s present and has implications for the country’s future.  

Many in the country have high hopes for a comeback following the narrow and surprising win of Mauricio Macri in the October 2015 presidential elections. Macri has pledged to create a more favorable environment for foreign direct investment, combat the double-digit inflation, and support industry development.

For me, this situation was especially fascinating in the context of my personal and professional interest in emerging markets and sustainable finance. Prior to Ross, I worked in emerging market entrepreneurship and impact investing. But my involvement in social finance over the past three years had focused on domestic enterprises through my involvement in the Michigan Social Venture Fund (SVF).  

Me and other students during the semester
abroad in Argentina

Upon entering graduate school, I had no formal training in finance; and while the SVF and classes like FIN 615 (Valuation) provided me with that structure, I still felt like I was missing the emerging-market lens that I had hoped to incorporate.

My study abroad experience in Argentina has definitely given me that — both inside and out of the classroom.

The final module of the course was titled “Investing in Emerging Markets.” The professor liked to wax poetic about country risk premium and how to value companies in unpredictable markets, but his main message was that no mathematical formula could accurately predict risk in these markets.

I found my mind wandering to Michigan Ross Professor Uday Rajan’s famous saying  — “finance is an art, not a science” — and wondering how the recent Argentinian political shift would set the stage for early-stage social enterprises’ access to growth capital and support.

Within the impact investing community, there’s a constant debate over which is the biggest barrier: the demand from investment-ready enterprises, or the supply of investment capital.

And that question is more relevant in Argentina now than it has ever been.

Will Macri’s improved attitude toward business result in a surge of entrepreneurship and innovation, leading to investment-hungry enterprises at all stages of the spectrum? Or, will a more favorable investment climate result in risk-seeking investors entering to capitalize on a first-mover opportunity?

Or, will the past decades of dysfunction, disappointment, and unpredictability continue to impede both entrepreneurs and investors alike?

A highlight of our seven-week adventure came in the final week, when our group met up with Ross alumni in Buenos Aires and got their perspectives on questions such as these.  

When asked about the Macri presidency, they expressed cautious and tempered optimism.  

One alum mentioned that until the recent lift of agricultural export tariffs, no one would consider growing anything other than soybeans; she was now for the first time looking to diversify toward something more sustainable and suitable for her land. An investment opportunity?

Perhaps, but only if you can figure out the art of valuing it.

Joanna Herrmann is a student in the Ross MBA Program pursuing a dual degree with the Erb Institute.

Learn more about exchange programs for Ross MBAs